Is It Better to Buy Physical Gold and Silver or ETFs? Here"s How to Decide

Whether you own real gold and silver or simply buy the ETF shares depends on your goal for the investment. I have both, for each its own reason. I DO prefer some ETFs over others and perhaps that’s a topic for another article.

Physical gold and silver are better in one respect, because you don’t notice the gain or loss in value. You still own it, no matter what the going price. It is difficult enough to sell, that you won’t just go sell it on a whim.

ETF’s on the other hand are liquid and offer easy in and easy out capability. Make money when they are going up and get out when they fall. ETFs will make you more in tune to daily price fluctuations of the precious metals. They make it easy to make short term profits on gold and silver with very little commitment.

ETF stands for Exchange Traded Funds. They are like mutual funds except they are tied to a particular segment of the market. In this case the ETF is tied to the gold or silver market. ETF’s can move with the market or in multiples of the market.

The ETF’s that move in multiples of the market are known as leveraged. If you want to go long, you invest in the ETF that moves with the underlying instrument. If you want to compound profits or losses, you can buy the 2X version called “Ultra”, or use the “UltraPro” which is 3X the underlying instrument.

Silver ETFs: AGQ, SLV, ZSL, USLV, SIVR, PSLV

Gold ETFs: UGL, RGLD, GLD, IAU, GTU, DGL, UGL, DGP, SGOL, ZKB, GDX, PHYS

Gold & silver mix: CEF,

Just like stocks, ETFs have both a long and short side. The long side ETF has no special name associated with it. The short side ETF is called an inverse ETF. It goes up as the market goes down. All ETFs look like a regular stock shares. You buy them, and own them the same as shares of stock.

So, you can invest when the market is going up or down, without having to go to the hassle of shorting shares that you have to buy back later. The leveraged ETFs, “Ultra” and “UltraPro” can be used with either the standard long ETF or the inverse ETF.

ETFs may or may not have the amount of metal backing them as they say. You can’t exchange your ETF for the actual metal. If a fiscal meltdown ever really happens, owning physical is the only alternative that will retain its value for exchanging for goods and services.

If the meltdown ever does occur, make sure you owe lots of worthless dollars, and make sure you own lots of gold and silver.

If you buy stocks, you are probably familiar with the ETF and may already have some. If you don’t buy or trade stocks, this will be completely foreign to you. I recommend them for liquidity as an easy get in when they’re profitable, and get out when they aren’t.

If you aren’t familiar with the process of doing this with little risk, don’t do it. The stock market is designed to TAKE your money. You need to learn some rules of the game before playing. It is far less risky to simply invest regularly in gold coins.

Source by Paul St. Julien

Is It Better to Buy Physical Gold and Silver or ETFs? Here"s How to Decide